WASHINGTON-Cyren Call Communications Inc. believes it can convince Wall Street to pledge at least $5 billion for the U.S. Treasury in an effort to get around congressional opposition to its proposal to set aside 30 megahertz of spectrum in the upper 700 MHz band for a public-safety network that the wireless industry would build and share with first responders.
“If the Public-Safety Broadband Trust became a government-chartered organization, it could get government-backed loans with the spectrum used as collateral to make up the difference of up to half of the expected $10 billion,” said John Melcher, Cyren Call executive vice president for external affairs. “You get your coverage, you get your spectrum and the government stays whole.”
The Congressional Budget Office estimates the 60 megahertz of spectrum at 700 MHz-including the 30 megahertz requested by Cyren Call-could generate between $10 billion and $15 billion for the U.S. Treasury. Some of the spectrum already has been auctioned. Earlier this year, Congress designated the revenues of the auction of the remaining 700 MHz spectrum for various purposes including $1 billion for public-safety interoperability and a set-top box subsidy as part of the transition to digital TV.
“If the $5 billion became a hole, it was too much of a political lift,” Melcher told RCR Wireless News.
Cyren envisions a public-private partnership with commercial operators that would underwrite network-infrastructure deployments in the 700 MHz band. First responders and others would have preferential access to the 30 megahertz during emergencies, but would otherwise occupy a very small portion of the network capacity to satisfy day-to-day public-safety requirements.
Congress designated 24 megahertz of the spectrum that is being returned as part of the DTV transition for public safety; the rest is to be auctioned. The Cyren Call plan would allocate two 15-megahertz chunks on either side of this 24-megahertz allocation for the public-private partnership.
Under Cyren Call’s financing proposal, the Public-Safety Broadband Trust would take out 30-year government-backed loans. Then as the system is built out and leased for commercial uses, the loans would be paid back. There would have to be a period of time at the beginning where the interest and principal would accrue without payment to give the entity operating the public-safety trust time to build out the system, said Melcher. Cyren Call is estimating 37,000 cell sites would be used to cover the nation.
In calling for a national debate on the Cyren Call plan, the National Emergency Number Association said the financing plan seems viable.
“NENA is aware that plans are being developed to ensure that revenue the U.S. Treasury is expecting from auction proceeds from the 30 megahertz of spectrum in question can be raised in the private-capital markets and be deposited in the treasury along with the auction proceeds from the remaining spectrum being auctioned on or before Jan. 28, 2008. If such a plan is viable, it appears the fiscal benefits of commercial auction of the 30 megahertz would be replicated,” said the NENA Board of Directors in a statement adopted Aug. 21.
One reason NENA highlighted the financing plan is the $1 billion set aside from the auction revenues for public-safety interoperability.
The wireless industry has expressed opposition to the plan because it wants the spectrum auctioned.
Clues that Cyren Call believed it had found a solution to the budget problem started to emerge earlier this month when the Association of Public-safety Communications Officials indicated that discussions at its annual meeting in Orlando “have shown that there may be reasonable options to overcome the financial requirements identified in the Budget Deficit Reduction Act.”
Cyren filed a petition with the Federal Communications Commission in April. The FCC has yet to act on the Cyren petition. However, recently the agency said it was reconsidering the band plan for the 700 MHz auction, but gave no indication of support for the Cyren proposal.
A month after Cyren filed its petition, FCC Commissioner Michael Copps indicated the agency’s hands were tied due to the auction language contained the DRA.
“The auction thing is even more clear since Congress is already counting on those funds,” Copps told reporters in May.
Without congressional support, it is unlikely the Cyren Call proposal can gain much traction; as such Cyren has spent the summer lining up public-safety organizations to endorse its plan or at least call for a national debate on the best use of the 700 MHz band.
In addition to APCO and NENA, Cyren Call was instrumental in getting the Michigan Association of Chiefs of Police to adopt a resolution urging Congress and the FCC to consider the Cyren proposal. Michigan is a key lobbying state as it is home to the House telecommunications subcommittee chairman as well as a ranking member of the House Commerce Committee.
Rep. Fred Upton (R-Mich.), chairman of the House telecommunications subcommittee, has previously criticized the Cyren proposal.
Melcher thinks that Upton will be more receptive to the Cyren Call plan now that Cyren has developed a financing plan.
“We didn’t want to go back to Mr. Upton until we had the financial situation figured out. Now that we think we are close to the final written proposal, Mr. Upton is first on the list,” said Melcher.
